Apple looks over its smartphone shoulder as Huawei sales surge

A strong holiday quarter boosted worldwide smartphone volumes to new record levels thanks to robust product offerings at numerous price points in both mature and emerging markets.

According to IDC, smartphone vendors shipped a total of 399.5 million units during the fourth quarter of 2015 (4Q15), resulting in 5.7 percent growth when compared to the 377.8 million units shipped in the last quarter of 2014.

For the full year, the worldwide smartphone market saw a total of 1432.9 million units shipped, marking the highest year of shipments on record, up 10.1 percent from the 1301.7 million units shipped in 2014.

“Usually the conversation in the smartphone market revolves around Samsung and Apple, but Huawei's strong showing for both the quarter and the year speak to how much it has grown as an international brand,” says Melissa Chau, Senior Research Manager, IDC.

“While there is a lot of uncertainty around the economic slowdown in China, Huawei is one of the few brands from China that has successfully diversified worldwide, with almost half of its shipments going outside of China.

“Huawei is poised to be in a good position to hold onto a strong number 3 over the next year.”

Apple dominance

Apple continued to dominate headlines in the quarter as 4Q15 represented its most successful quarter yet with 74.8 million units shipped, up 1 percent from the 74.5 million shipped last year.

Although the Cupertino-based vendor witnessed minimal growth year over year, its 2015 total market share climbed to 16.2 percent, up from 14.8 percent in 2014.

Growth in key markets such as China were up 18 percent, in which 50 percent were first-time iPhone owners.

Sales in many emerging markets were also up as India saw the biggest increase among the BRIC countries with 76 percent growth.

Apple accomplished all this despite the increase in average selling price (ASP) for an iPhone. ASPs climbed to $691, up from $687 one year ago, potentially pointing to increased demand for a larger screen and higher capacity models.

“With initial Apple shipment estimates all over the map, Apple assured the public that demand for its premium smartphones is still alive and kicking,” adds Anthony Scarsella, Research Manager, IDC.

“Features such as a more widely accepted Apple Pay, increased performance, and the innovative Force Touch technology, continue to set the iPhone apart from the competition.”

To combat Apple at the high-end, Scarsella believes competing vendors will need to bring value to consumers to stay relevant in the market.

“With heavy saturation in many mature smartphone markets such as the U.S., Europe, and China, many vendors have placed a renewed focus on pushing premium-looking mid-tier devices as a new value proposition to consumers in both developed and emerging markets,” he adds.

Continued demand for Apple's iPhone 6S and 6S Plus, particularly in China and the U.S., elevated Apple in 2015 to 231.5 million units shipped in the year.

Scarsella says this represents 20.2 percent growth from the 192.7 million units shipped in 2014.

The combination of new innovative features such as Apple Pay and Force Touch, combined with a new Rose Gold colour, better performance, and increased speed, helped drive upgrades and attracted Android switchers in record numbers.

For Scarsella, Huawei was the biggest winner in the quarter, with the strongest year-over-year growth among the top five vendors at 37 percent.

Huawei also became the fourth mobile phone vendor in history to ship over 100 million smartphones in a year (preceded only by Nokia, Samsung and Apple).

Of the key brands originating from China, Scarsella says Huawei has consistently expanded its presence and share on the back of affordable handsets in emerging markets, combined with increasingly competitive flagship models.

Lenovo, just over one year after its acquisition of Motorola, was still trying to find its feet amidst organisational changes while facing greater competition in its domestic market from smaller, local competitors at the low end.

Scarsella reports that the Motorola brand, strong in 2014 in the Americas with the Moto G and Moto X, saw fewer groundbreaking new models in 2015.

The Motorola name will be shortened to just "Moto" and be used for high-end devices while the "Vibe" brand from Lenovo will represent the low-end.

Looking ahead, Scarsella believes Lenovo will also put its faith entirely in Motorola as they have elected Moto to design, develop, and manufacture smartphone products going forward.

In addition, Scarsella says Xiaomi leaned heavily on the China market for growth, where volumes were still 90 percent domestic on average compared to international, despite ramping up in India and launching in Brazil.

Xiaomi spent 2015 trying to encourage a transition away from the low-end range of models into more midrange models, although the bulk of shipments still rest on low-end volumes from the Redmi line.

On the basis of this growth, it was able to widen the gap from number 6, LG.

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